Telecom, power, road claimed 33% of bank credit

MUMBAI: Telecom, power and road gobbled up a third of the banking sector loans to industry last fiscal, which may skew the asset-liability position of banks that have more of short-term funds. Agriculture , microfinance and education loans growth rate slowed, raising the possibility of slow farm output growth that may keep food prices high. Personal loans and pledging of shares and bonds for funds also jumped as consumers confident of rising pay splurged on durables such as refrigerators, cars and motorcycles, RBI data show.

Lending to non-banking finance companies, the lenders who mostly don't take deposits or offer cheque facility but perform a similar function to that of banks, jumped more than 50% as they onlent for purchase of trucks, machinery and other industrial equipment. Telecom loans rose the fastest among infrastructure as firms such as Bharti Airtel and Reliance Communications paid more than Rs 1 lakh crore to buy spectrum for 3G services. "Now, we are in a strong position to grow," Chanda Kochhar, chief executive at ICICI Bank, had said. "It is expected to be in line with industry growth... a little upward of 20% in 2011-12.

This year, the thrust will be on project-financing , working capital, housing and car loan segments." Indian banks are forecasting more than 20% growth in loans this fiscal as companies expand capacities to meet the growing demand. But at the same time, rising interest threatens to slow demand and also hurt their profitability . With banks that depend on short-term funds such as current and savings accounts , any delay in implementation of infra-structure projects could raise their bad loans. That could lead to falling profits in future. Nonfood credit comprising loans to businesses rose 20.6% in FY11 to Rs 3,667,354 crore, compared with a 16.8% growth the previous year.